Crisis Management Lesson from Toyota and GM: “It’s Our Problem the Moment We Hear About It”

The Harvard Law School Forum on Corporate Governance and Financial Regulation 2014-03-20

Summary:

Editor's Note: Ben W. Heineman, Jr. is a former GE senior vice president for law and public affairs and a senior fellow at Harvard University’s schools of law and government. This post is based on an article that appeared in the Harvard Business Review online, which is available here.

Delay in confronting crises is deadly. Corporate leaders must have processes for learning of important safety issues. Then they must seize control immediately and lead a systematic response. Crisis management is the ultimate stress test for the CEO and other top leaders of companies. The mantra for all leaders in crisis management must be: “It is our problem the moment we hear about it. We will be judged from that instant forward for everything we do—and don’t do.”

These are key lessons for leaders in all types of businesses from the front page stories about Toyota’s and GM’s separate, lengthy delays in responding promptly and fully to reports of deadly accidents possibly linked to product defects.

The news focus has been on regulatory investigations and enforcement relating to each company, but the ultimate question is why the company leaders didn’t forcefully address the possible defect issues when deaths started to occur.

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Link:

http://blogs.law.harvard.edu/corpgov/2014/03/20/crisis-management-lesson-from-toyota-and-gm-its-our-problem-the-moment-we-hear-about-it/

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Tags:

op-eds & opinions accountability ben heineman compliance & ethics doj general motors management oversight toyota

Authors:

Benjamin W. Heineman, Jr., Harvard Law School Program on Corporate Governance and Harvard Kennedy School of Government,

Date tagged:

03/20/2014, 18:50

Date published:

03/20/2014, 15:57